Despite the ongoing coronavirus epidemic, inward remittances hit new height in the country through Agent Banking Service (ABS) in 2020. ABS has made a significant record contribution to collect the foreign remittance and it has bagged Tk. 116.85 billion from July to September of this year 2020 which was double than the pre COVID-19 period. ABS has bagged Tk. 71.15 billion from April to June of this year 2020.
According to the latest data of Bangladesh Bank, ABS has collected Tk. 155.34 billion foreign remittance upto December, 2019 whereas it has collected Tk. 228.31 billion foreign remittance from January to September, 2020 keeping three months remaining at the end of this year, i.e. within nine months of this year the remittance growth of the ABS achieved 221 percent.
People are getting remittances from abroad and they can now pay their utility bills through this channel uninterruptedly. Some youth are finding new opportunities of employment in agents. Agents also are deploying additional workforce for its day to day smooth operations. Availability of mobile phones and internet facilities in rural areas have made it easier for ABS. As a result, customs are inflicted in ABS to collect remittance inflow quickly and hassle freeway.
ABS of 24 banks is now engaged to collect the foreign remittance mostly located in the remote areas of the country. Out of those banks, Islami Bank Bangladesh Ltd (IBBL) made a significant role of the foreign remittance. The IBBL solely has collected 45 percent of the whole ABS foreign remittance, DBBL secured the second position, Bank Asia, Al-Arafah Islami Bank and Agrani Bank bagged the following positions respectively.
The reason behind the success of IBBL was that they have a strong network in home and abroad for foreign remittance since long. They have a dominant position in remittance prone area especially in Middle East, Malaysia, Singapore etc from the 90’s decade. IBBL has been collecting near about one third of the country’s whole foreign remittance since long with good reputation. IBBL was also providing 1 percent more cash incentive on the remittance of the ABS account holders in addition to the government declared 2 percent cash incentive which helped them to make record in ABS remittance inflow.
According to the latest data of Bangladesh Bank, the expatriates in 12 days of November 2020 have sent $1.66 billion and within 25 days of November 2020, they have sent $2.00 billion which is an all-time high record in the country’s remittance history. From July 1 to November 12, 2020 remittance inflow stood at $9.89 billion, up 43.42 percent from $6.89 billion year-on-year. It was $6.897 billion in the same period of the last fiscal year 2019-2020. Foreign currency reserve also made record of $40.82 billion at end of October 2020 and on November 26, 2020 it made further record of $41.30 billion.
Various measures, including a timely 2 percent cash incentive by the government, have a significant impact on the continuation of this upward trend in expatriate income. The migrant workers also remitted $2.11 billion in October, 2020 which was way higher than $1.64 billion flown to the country in the same month a year ago.
Although the Bangladesh Bank issued an ABS guideline in 2013, the first bank started its full-fledged agent operations in 2016. ABS service is becoming more popular day by day to the clients in remote area in terms of less costing way after its inception. Presently 14,016 outlets of 10,160 agents in 24 banks are deployed across the country to provide the services and they have collected remittances of Tk. 338.35 billion upto September 2020 and of those agents, 90 percent are located in remote rural areas.
The purpose of introducing ABS is to provide a safe and secured alternative delivery channel for banking services to the under-privileged, under-served population, who generally live in a geographically remote location and beyond the reach of the traditional banking network.
Central bank officials said that the deposit growth in the agent banking accounts was mainly because of expansion of the service in the grassroot rural areas where people are deprived of banking service. As per the central bank’s provisions, it is expected that the ABS will provide the maximum number of services to the clients. Therefore, they should not limit themselves only to facilitating account access to customers or transferring money.
BB introduced ABS a few years ago to reach the banking services to the doorstep of the grassroots level. BB also introduced mobile banking services in 2013 but the transaction of the mobile banking service is limited scale and most of the banking services are not available there. Agent banking has been able to get such popularity mainly for its simplicity to the clients and cost-effectiveness for the banks.
ABS has facilitated customers by providing full-fledged banking services at their doorsteps in the grassroot’s remote area, and it has made convenient and easy way for channeling remittance. ABS are also playing a dominant role to prevent Hundi (illegal transfer of money) and it has a significant contribution in the formal economy.
ABS is much better than mobile banking services and it is a new concept in banking industry but have a big challenge and also a high potentiality. BB as well as the relevant functioning banks should have a plan to popularise the ABS through circulating lucrative and eye-catching advertisement in print, electronic and social media and take the chance of rapid growth of the services in the grassroot remote areas. Then it will more contribute in remittance, deposit as well as in national economy.
(Mr. Rahaman is a banker and freelance contributor. Email: [email protected] )
